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Thursday, 28 July 2011

Supply Chain Simplified

Every product we buy in the market has a process of manufacturing behind it. Various steps are involved in the process of its manufacturing .Starting from sourcing of raw materials and their transportation, it passes through manufacturing process, storage in warehouses, supply to wholesalers, distribution to retailers and finally sales to customers. It also includes after-sales service, wherever necessary. Supply chain, in simple words, is the linkage of all the above mentioned steps in the same order till a product reaches a consumer.

Shifting to a technical definition, a Supply Chain can be defined as a network of  facilities and distribution options which facilitate the performance of functions like procurement of raw materials- conversion of these raw materials into intermediate finished products and distribution of finished products to customers.

Supply Chain exists both in manufacturing and service industries, but the complexity differs from one another.

Consider the case of a customer purchasing a detergent from a supermarket. The supply chain in this case, begins with the customer and his/her requirement. The next stage in the supply chain is the super market which sells the detergent to the customer. The super market gets its supply of detergents from its own warehouse or a distribution, using trucks supplied by a third party. The distributor is provided with stocks by the manufacturer, who receives the raw materials from a variety of suppliers. All these stages, involved in the manufacture of the product and its reaching the customer is called a supply chain.

A supply chain is dynamic and involves constant flow of funds , information and product between different stages. Supply chain activities begin with a customer order and end when satisfied customer pays for the product. The term supply chain conjures up images of movement of components or products from supplier to manufacturers to distributors to retailers to customers along a chain. Information, funds and products flow along both sides of the chain.

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